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Forex - Dollar sharply lower after U.S. Q3 GDP data

Published 10/27/2011, 08:40 AM
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Investing.com - The U.S. dollar extended broad losses against its major counterparts on Thursday, after preliminary data showing that the U.S. economy grew more-than-expected in the third quarter added fuel to a broad based risk rally.

During European afternoon trade, the dollar was sharply lower against the euro, with EUR/USD jumping 1.09% to hit 1.4057.

Risk appetite was boosted after European leaders reached an agreement with private banks on a voluntary 50% reduction of Greece's debt. The writedown will reduce Greece’s debt burden from 160% of GDP to a more sustainable 120% by 2020.

Leaders also agreed to expand the firepower of the euro zone's bailout fund, the European Financial Stability Facility.

The greenback was also lower against the pound, with GBP/USD rising 0.26% to hit 1.6017.

Meanwhile, the greenback hit a fresh record low against the yen and was also down sharply against the Swiss franc with USD/JPY dropping 0.61% to hit 75.71 and USD/CHF tumbling 1.27% to hit 0.8697.

Earlier Thursday, Japanese Finance Minister Jun Azumi reiterated that his country would take decisive action against excessive yen moves.

In addition, the Bank of Japan announced additional monetary easing to help lower the yen. The central bank expanded its asset purchase program by JPY5 trillion to JPY55 trillion yen and kept the overnight lending rate at 0.1%.

Elsewhere, the greenback was sharply lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 1.04% to hit 0.9936, AUD/USD surging 2.40% to hit 1.0648 and NZD/USD jumping 1.73% to hit 0.8149.

The Reserve Bank of New Zealand left its interest rate unchanged at 2.50% earlier, saying that recovery needs more stimuli to return back strongly on track before the end of the year.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, tumbled 1.07% to hit 75.59.

Earlier Thursday, the Bureau of Economic Analysis said U.S. third quarter gross domestic produce expanded by 2.5% in the third quarter, beating expectations for growth of 2.4%.

In a separate report, the Department of Labor said initial jobless claims fell slightly less-than-expected last week, declining to 402K, disappointing expectations for a decrease to 400K.

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